SV Strategisch Management & ICT
Lecture 1 – Introduction
Introduction to strategic management
• Strategic management is the process of defining and executing the business strategy that is
aimed at the long-term well-being of the organization
• Strategy: the direction and scope of an organization over the long term, which achieves
advantage in a changing environment through its configuration of resources and
competences with the aim of fulfilling stakeholder expectations
o Typical decisions include: choice of industry, firm configuration, resource
investments, pricing tactics and scope decisions
• Strategic management requires
o Strategic thinking: creative entrepreneurial insight into the ways the enterprise could
develop
o Strategic planning: systematic, comprehensive analysis to develop a plan of action
o Opportunistic decision-making: effective responses to unexpected threats and
opportunities
Strategic thinking
• Mission: Unambiguous statement of what the organization does and its long-term, overall
purpose.
o Sets direction and must be inspirational
o Often contains values the organization stands for
o “Who we are and what we do”
o Eg: Mission statement FB: “Give people the power to build community and bring the
world closer together”
• Vision: What the business will be in the future and how it will operate.
o Give the whole organisation a destination
o Should bring the strategy alive, shared picture of future aim
o “Where are we going”
o Eg: vision statement Google: “To provide access to the world’s information in one
click”
• Objectives:
o Goals that are set for achieving the vision
o Objectives at several levels, from corporate to business unit to business functions
o Example of higher-level objectives by Heineken:
▪ Grow Heineken brand
▪ Top 3 in every market
▪ Capture opportunities in emerging markets
o Objectives should be SMART – Specific, Measurable, Attainable, Relevant and
Time-bound
1
, • We now know which direction we want to go to. How to
achieve this: Strategy
• Different strategies
o IS Strategy + IT Strategy = IS/IT Strategy or
Digital Strategy
o Business and IS/IT strategies should be aligned
BMC
• Good starting point for any strategy: Business Model
Canvas
• Strategy tool: template for developing new or
documenting existing business models
Book (Ward) Chapter 1
• Information systems (IS) are the means by which
people and organizations, increasingly utilizing
technology, gather, process, store, use and disseminate
information; changes continually due to development
and changing interaction with human society
• Information Technology (IT) refers specifically to
technology
• Application: an application of IT to handle information
in some way. An application refers to software, or a combination of software and hardware,
used to address or enable a business or personal activity (patient administration, check in for
flight)
• Digital has both an IS component and an IT component.
• A transaction cost is incurred in making an economic exchange, i.e. the cost of participating
in a market. Information is at its core. Transaction costs include search and information cost
(determining that the required good or service is available on the market)
• Platform and network effects, and the economics of networks, are more important now than
before and both drive the adoption of IS/IT and are enabled by IS/IT
• The Internet of things (IoT) describes the network of physical objects—“things”—that are
embedded with sensors, software, and other technologies for the purpose of connecting and
exchanging data with other devices and systems over the Internet.
• Online retailers contribute to the long tail: a business strategy that allows companies to
realize significant profits by selling low volumes of hard-to-find items to many customers,
instead of only selling large volumes of a reduced number of popular items.
• The prime objective of using IS/IT in the eras differs:
o Data Processing (DP): to improve operational efficiency by automating information
flows and processes (often referred to as digitizing processes today).
o Management Information Systems (MIS): to increase management effectiveness
by satisfying their information requirements for decision making.
o Strategic Information Systems (SIS): to improve competitiveness by changing the
nature or conduct of business → IS/IT investments can be a source of strategic
advantage).
2
, • Uses of IT:
o Business process redesign - using IS/IT to realign business activities and their
relationships to achieve performance breakthroughs.
o Business network redesign - changing the way information is used by the
organization and its trading partners, thereby changing how the industry overall
carries out the value-adding processes.
o Business scope redefinition - extending the market or creating new products, based
on information, or changing the role of the organization in the industry, such as with
the introduction of a new information-enabled business model.
• It is the inability to implement the necessary business and organizational changes that
means many IT investments deliver fewer benefits than expected.
• Success factors in strategic information systems
1. External, not internal focus: looking at customers, competitors, suppliers, even
other industries and what is happening in the outside world - both business and social.
2. Adding value. not cost reduction: although cost reductions may grow due to
business expansion at reduced marginal costs, 'doing it better, not cheaper' seems to
be the maxim.
3. Sharing the benefits within the organization, with suppliers, customers, consumers
and even competitors (on occasion!}
4. Understanding customers and what they do with the product or service: how
they obtain value from it, and the problems they may encounter in gaining that value
5. Business-driven innovation, not technology-driven: the pressures of the
marketplace drove developments in most cases
6. Incremental development, not the total application. vision turned into reality.
7. Using the information gained from the systems to develop the business.
8. Monetizing information.
• Application portfolio
o Strategic applications and investments are critical to future business success.
o High potential are (risk) investments in innovative applications of IS/IT which may
create opportunities to gain a future advantage
o Key operational applications and investments sustain the existing business
operations, helping to avoid any disadvantage.
o Support applications and investments reduce costs by increasing business efficiency,
or improve management effectiveness
• IS/IT Strategy: long term, directional plan which decides what to do with IT that is
concerned primarily with aligning IS development with business needs and seeking advantage
from IT
o Infusion - the degree to which an organization becomes dependent on IS/ IT to carry
out its core operations and manage the business;
o Diffusion - the degree to which IS/IT has become distributed throughout the
organization and decisions concerning its use are devolved.
➔ Both high is hard to manage, low is traditional
o IS strategy is firmly grounded in the business, taking into consideration both
alignment with the business strategy and the potential competitive impact - the 'IS
demand'.
o IT strategy is concerned with how that demand for information and applications will
be enabled and supported by technology - essentially, it is concerned with 'FT
supply'.
o Strategic alignment describes the extent to which the organization's portfolio of IS/
IT investments directly enables and supports its business strategy. Lack of strategic
3
Lecture 1 – Introduction
Introduction to strategic management
• Strategic management is the process of defining and executing the business strategy that is
aimed at the long-term well-being of the organization
• Strategy: the direction and scope of an organization over the long term, which achieves
advantage in a changing environment through its configuration of resources and
competences with the aim of fulfilling stakeholder expectations
o Typical decisions include: choice of industry, firm configuration, resource
investments, pricing tactics and scope decisions
• Strategic management requires
o Strategic thinking: creative entrepreneurial insight into the ways the enterprise could
develop
o Strategic planning: systematic, comprehensive analysis to develop a plan of action
o Opportunistic decision-making: effective responses to unexpected threats and
opportunities
Strategic thinking
• Mission: Unambiguous statement of what the organization does and its long-term, overall
purpose.
o Sets direction and must be inspirational
o Often contains values the organization stands for
o “Who we are and what we do”
o Eg: Mission statement FB: “Give people the power to build community and bring the
world closer together”
• Vision: What the business will be in the future and how it will operate.
o Give the whole organisation a destination
o Should bring the strategy alive, shared picture of future aim
o “Where are we going”
o Eg: vision statement Google: “To provide access to the world’s information in one
click”
• Objectives:
o Goals that are set for achieving the vision
o Objectives at several levels, from corporate to business unit to business functions
o Example of higher-level objectives by Heineken:
▪ Grow Heineken brand
▪ Top 3 in every market
▪ Capture opportunities in emerging markets
o Objectives should be SMART – Specific, Measurable, Attainable, Relevant and
Time-bound
1
, • We now know which direction we want to go to. How to
achieve this: Strategy
• Different strategies
o IS Strategy + IT Strategy = IS/IT Strategy or
Digital Strategy
o Business and IS/IT strategies should be aligned
BMC
• Good starting point for any strategy: Business Model
Canvas
• Strategy tool: template for developing new or
documenting existing business models
Book (Ward) Chapter 1
• Information systems (IS) are the means by which
people and organizations, increasingly utilizing
technology, gather, process, store, use and disseminate
information; changes continually due to development
and changing interaction with human society
• Information Technology (IT) refers specifically to
technology
• Application: an application of IT to handle information
in some way. An application refers to software, or a combination of software and hardware,
used to address or enable a business or personal activity (patient administration, check in for
flight)
• Digital has both an IS component and an IT component.
• A transaction cost is incurred in making an economic exchange, i.e. the cost of participating
in a market. Information is at its core. Transaction costs include search and information cost
(determining that the required good or service is available on the market)
• Platform and network effects, and the economics of networks, are more important now than
before and both drive the adoption of IS/IT and are enabled by IS/IT
• The Internet of things (IoT) describes the network of physical objects—“things”—that are
embedded with sensors, software, and other technologies for the purpose of connecting and
exchanging data with other devices and systems over the Internet.
• Online retailers contribute to the long tail: a business strategy that allows companies to
realize significant profits by selling low volumes of hard-to-find items to many customers,
instead of only selling large volumes of a reduced number of popular items.
• The prime objective of using IS/IT in the eras differs:
o Data Processing (DP): to improve operational efficiency by automating information
flows and processes (often referred to as digitizing processes today).
o Management Information Systems (MIS): to increase management effectiveness
by satisfying their information requirements for decision making.
o Strategic Information Systems (SIS): to improve competitiveness by changing the
nature or conduct of business → IS/IT investments can be a source of strategic
advantage).
2
, • Uses of IT:
o Business process redesign - using IS/IT to realign business activities and their
relationships to achieve performance breakthroughs.
o Business network redesign - changing the way information is used by the
organization and its trading partners, thereby changing how the industry overall
carries out the value-adding processes.
o Business scope redefinition - extending the market or creating new products, based
on information, or changing the role of the organization in the industry, such as with
the introduction of a new information-enabled business model.
• It is the inability to implement the necessary business and organizational changes that
means many IT investments deliver fewer benefits than expected.
• Success factors in strategic information systems
1. External, not internal focus: looking at customers, competitors, suppliers, even
other industries and what is happening in the outside world - both business and social.
2. Adding value. not cost reduction: although cost reductions may grow due to
business expansion at reduced marginal costs, 'doing it better, not cheaper' seems to
be the maxim.
3. Sharing the benefits within the organization, with suppliers, customers, consumers
and even competitors (on occasion!}
4. Understanding customers and what they do with the product or service: how
they obtain value from it, and the problems they may encounter in gaining that value
5. Business-driven innovation, not technology-driven: the pressures of the
marketplace drove developments in most cases
6. Incremental development, not the total application. vision turned into reality.
7. Using the information gained from the systems to develop the business.
8. Monetizing information.
• Application portfolio
o Strategic applications and investments are critical to future business success.
o High potential are (risk) investments in innovative applications of IS/IT which may
create opportunities to gain a future advantage
o Key operational applications and investments sustain the existing business
operations, helping to avoid any disadvantage.
o Support applications and investments reduce costs by increasing business efficiency,
or improve management effectiveness
• IS/IT Strategy: long term, directional plan which decides what to do with IT that is
concerned primarily with aligning IS development with business needs and seeking advantage
from IT
o Infusion - the degree to which an organization becomes dependent on IS/ IT to carry
out its core operations and manage the business;
o Diffusion - the degree to which IS/IT has become distributed throughout the
organization and decisions concerning its use are devolved.
➔ Both high is hard to manage, low is traditional
o IS strategy is firmly grounded in the business, taking into consideration both
alignment with the business strategy and the potential competitive impact - the 'IS
demand'.
o IT strategy is concerned with how that demand for information and applications will
be enabled and supported by technology - essentially, it is concerned with 'FT
supply'.
o Strategic alignment describes the extent to which the organization's portfolio of IS/
IT investments directly enables and supports its business strategy. Lack of strategic
3
